Iran's economy is marked by an inefficient state sector, reliance on the oil sector, which provides the majority of government revenues, and statist policies, which create major distortions throughout the system. Most economic activity is controlled by the state. Private sector activity is typically limited to small-scale workshops, farming, and services. Price controls, subsidies, and other rigidities weigh down the economy, undermining the potential for private-sector-led growth. Significant informal market activity flourishes. The legislature recently passed President Mahmud AHMADI-NEJAD's bill to reduce subsidies, particularly on food and energy. The bill would phase out subsidies - which benefit Iran's upper and middle classes the most - over three to five years and replace them with cash payments to Iran's lower classes. This is the most extensive economic reform since the government elevated gasoline rationing in 2007. However, previous government-led efforts to reform subsidies - such as in the 1990s under former president Hashemi RAFSANJANI - were met with stiff resistance and violent protests. High oil prices in recent years allowed Iran to greatly increase its export earnings and amass nearly $100 billion in foreign exchange reserves. But with Iran's oil export price from March to December 2009 averaging just $55 per barrel and with a slight decline in oil production over the past four years, the Iranian government is facing budget constraints. Tehran formulated its 2009 budget to anticipate lower oil prices and has reduced some spending. Although inflation has fallen substantially because of lower oil prices, Iran continues to suffer from double-digit unemployment and underemployment. Underemployment among Iran's educated youth has convinced many to seek jobs overseas, resulting in a significant "brain drain....More..